Mac,
PM me your phone number if the explaination below is not clear. There are some other points as well but too much typing for me to go into.
Let's see if I can type the explaination...
When 'short selling' at a 'limit' (the trigger), you are committing to sell a particular stock at that price (or hopefully near it) in the future.
Basically you are selling a stock you don't own yet, selling it on credit (so to speak).
You'll make this type of transaction only on those stocks you think are going to go down in value.
After you've completed your 'short sell', you'll then put in a 'buy to cover' transaction at a 'limit' (trigger) at a value you think the stock will drop at.
Let's say AAPL is trading at $146.00 and you think that it is overvalued at this time (thinking it will drop in value). You then put in a 'short sell' order of 100 (just an example) shares @$146.00 limit. As long as the price stays at $146.00 or above, the transaction will go through provided your balance/credit are good. The transaction will not take place as long as the price of the stock does not reach $146.00 or higher.
In our example, let's say the price stayed at $146.00. You have now sold 100 shares of AAPL (on credit). You are now committed to 100 x $146.00 = $14,600.00 which is now reserved for you when you finally complete your future 'buy to cover' transaction.
So you think AAPL will drop to $126.00. You put in a 'buy to cover' order of 100 shares at the $126.00 'limit'.
When the price drops to $126.00, that transaction will be triggered. As long as the value isn't bouncing wildly you should have a completed transaction at $126.00/share.
You have now bought your 100 shares you sold off earlier for $12,600.00.
The net result is you have made $2,000.00 in the above transaction.
Remember that your 'limit' pricing is a trigger in that when your stock hits that value, the transaction then gets started. If the value of your stock is changing by the second (sometimes even minute) at the time of the transaction, your end result might not be at the value you set it at.
There are other things about short selling as well, but I'll stop here. Too much text as it is.
